can i use liquid bees margin to trade intraday equity and hedge positions in option which includes buying and selling of options
You can use the collateral margin for intraday equity, trading futures and shorting options. For buying options you’ll need cash in your account, cannot use collateral margin.
But . Liquidbees are cash equivalent. So no need of other cash to keep
Am I right?
Liquid Bees might be considered as cash equivalent but the margin is still collateral. So, for buying options you’ll need cash and cannot use collateral margin.
Some Major Question…
Q1: For Example , If i had mutual fund investment of ( 5L ) and i get 450000 as collateral margin , and i need 700000 for option selling and distribute in such manner like (450000 as margin + 250000 as cash ) . Then on which amount 0.05% interest rate is applicable.
Q2: Can i use liquidbees full margin for option selling because liquidbees is cash component or i need to add extra 50% cash in my funds ?
Q3: Does 0.05% interest rate also applied on saturday sunday or on other non working days ?
For F&O positions, minimum 50% margin should come in cash or equivalent and remaining 50% can come from collateral margin.
If you use excess collateral margin ie. > 50% then there will be interest charged at 0.05% per day on excess margin.
You can use full collateral margin received from pledging Liquid Bees, as it is considered as cash equivalent.
Though, do have some cash in your account to cover losses and charges arising from trading, as collateral margin cannot be use towards this.
Sir according to you
I need to pay 0.05% interest on ₹ 200000
( To maintain 1:1 ratio )
For 700000 , I need to use in such manner (350000 as margin : 350000 as cash) .
But instead of this i use this in such way [(250000 as margin + 200000 excess margin) : 250000 as cash] .
So i can get ₹700000 . So according to this 200000 is excess collateral margin .
Am i Right ?
For 7 lakhs margin. Minimum 350k should come in cash or equivalent and remaining 350k can come from collateral margin.
Out of 350k cash you’re only bringing 250k, and using excess 100k collateral. Interest will be on this 100k.
Sorry for disturbing
Required Amount 700000
Sir actually i’m using ( 450000 as collateral margin + 250000 as cash )
Sir can you please confirm exact amount on which interest will be charged
- According to me its 200000 because as you said interest will be charged on excess >50% and
excess amount occur on collateral margin side not on cash side .
Total margin requirement: 700k
At 50:50, maximum collateral margin you can use: 350k
Collateral margin you are using: 450k
Excess: 100k (450k - 350k)
Suppose I’ve pledged margin in my account, both cash & non-cash component. Then the order in which margin gets utilized is non cash first, then cash component, and then the actual cash, right?
As an example, suppose I’ve 20L worth of margin in my account, 5L from pledged nifty bees, 10L from pledged liquid fund, and 5L actual cash. Then suppose I take overnight position worth 12L. So, here the utilization process will be 5L from pledged nifty bees + 7L from from pledged liquid funds, and 8L will be left (3L liquid fund + 5L cash). @ShubhS9, is my thinking right here?
When you take position, margin blocked will be from the collateral margin you have. Your free cash will remain available for you to utilise elsewhere.
Duh. Yes, I understand that free cash will get utilized last. What I wanted to know was if we have both type of collateral margin (cash/non-cash), which will get utilized first? I’m presuming it’s non-cash, but want to confirm it once.
Suppose I’ve 20L worth of margin, of which 10L is from liquid fund (cash), 8L from nifty bees (non-cash) & 2L as cash.
a) Scenario 1 (liquid fund utilized first): I take 10L worth of overnight position, which utilizes 10L of liquid fund. Then I’ve 8L of non-cash component & 2L cash left. Suppose now I want to take 8L worth more of overnight position, this wouldn’t be possible since the non-cash component requires 50% cash or cash equivalent, so only 4L worth of overnight position is possible.
Total overnight position: 14L
b) Scenario 2 (non-cash gets utilized first): I again take 10L worth of overnight position, this would utilize 5L non-cash and 5L liquid fund. 5L liquid fund, 3L non-cash, and 2L cash left. After that if I want to take 8L worth more of overnight position, I can do so with the help of 3L non-cash component & 5L liquid fund. And 2L free cash will be left.
Total overnight position: 18L
So, as you can see, both scenarios give different amount of margin. Scenario 2 is what will happen I guess, but want to confirm it once…
@siva, can you confirm which of the two scenarios will get implemented in this case?
To take a position there is no difference between cash collateral and stock collateral.
Nothing like that, you can take anything upto 20 lakhs as you already got 50% in cash collateral.
Also you should note cash collateral and stock collateral comes only for reporting but not for taking position.
The amount we get after pledging allow us to sell options. But if we want to sell option and also to hedge them we want to add some buying option position .
Can we do this ?
Yes. But buying options requires cash. Can’t use collateral for that.
Can we use pledged share of liquidbees for buying option because it is also considered as cash.
No. Buying options has to be cash, not cash collateral.
What happen to my Pledged Securities ?
If my Broker Ran Away ?
Can I get them from CDSL ?